Money Saving Tips for the Sole Trader

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By Crispin Bateman
Updated on Thursday 26 September 2019

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Being a sole trader is really exciting, but can also be an edgy financial prospect, especially in the early days as you build up your business. You need to be careful with your finances to make sure every penny is used well as you build up and stabilise the enterprise.

Here are ten top self-employed tips from us at Compare UK Quotes!

#1 – Get an Accountant

Leaping right to the top of the list is the single most important thing to do. Unless you are an accountant yourself, an accountant knows more about saving you money than you do!

The cost of an accountant can be as little as £200 per year (and that’s an expense that will be offset against your tax!), and they will save you thousands of pounds a year in tax.

Not a few pounds, not a hundred or two, thousands.

An accountant is almost certainly going to save you more money than they cost, so it makes immediate sense – they will reduce the tax bill for anyone self-employed in the UK.

But it’s not just about the money. An accountant gives you legitimacy, it means you are relaxed and can work on making money doing the thing you went into business to do, plus they provide you with a comprehensive financial record of your business, which means you will find it easier to get credit.

A self-employed person or sole trader who works with an accountant will grow their business and stride forward with confidence.

Look for a local accountant, check reviews, and request a no-obligation free initial consultation. You’ll never look back.

#2 – Use other specialists

Having an accountant is one instance of outsourcing to an expert, but it’s not the only example where doing that saves you money.

You are good at your job, and know how to make money doing it, but that doesn’t mean you are good at everything that comes with running a successful business. You might want a website – so find a good and affordable web-designer. You may want marketing materials – find a great designer and copywriter.

It is far better to spend the hours doing the work you made your business about than struggling trying to learn a new skill and (ultimately) doing the job at an amateur level.

Outsourcing can feel expensive, but it works out significantly more cost effective in the long run and, as tax saving tips for small businesses in the UK go, offsetting your tax against your business expenses is top of the list!

#3 – Be on top of your self-employed money management

You can leave a lot to an accountant, but the day to day running of your money is down to you. It is important that you separate your personal money from that of the business, but that doesn’t always mean getting a sole trader business bank account that comes with fees – plenty of current accounts perform adequately for small businesses.

Don’t get stuck assuming you should bank with your main high-street bank either – use this opportunity to look at the strong emerging market with online-only banks. Both Monzo and Starling provide excellent accounts with impressive money-management tools that will help you stay on top of your business spending. Starling also has a dedicated business account for you as you grow, and Monzo is developing theirs.

App-based banking gives you total control of your business finances at your fingertips and having constant awareness of your banking will help with saving money as a sole trader simply by making you more alert to any unnecessary spending.

#4 – Lease, don’t buy

Raising the capital for investment in an asset can be a difficult thing for a self-employed entrepreneur, especially for things like cars or specialised equipment.

It is often important that you arrive at your clients looking professional, and leasing a car gives you access to a brand-new vehicle without needing to find tens of thousands of pounds in capital. Plus, many of the costs of leasing a car are offset against your tax making leasing one of the best tax-saving ideas for small business owners.

This is especially true for those small businesses that rely on a van for the day-to-day running of the company. Leasing a van is one of the best saving options for a sole trader as having a new vehicle means fewer repair costs, affordable and easily budgeted monthly payments and peace of mind.

It’s not just vehicles that you can lease, either. Asset finance exists for everything from a crane for a construction company through the laptop you need to run your customer management database. You can even lease the office furniture!

At Compare UK Quotes,  we would like to recommend Complete Leasing Ltd. as one of the best leasing companies in the UK!

#5 – Make sure your insurance is all correct and up to date

Insurance is an important thing for a small business, especially if you employ someone else. In some places, it is a legal requirement (employee liability, car insurance etc.) and in others, it’s an optional thing that just makes a lot of sense.

Look into all the different types of business insurance and make sure you are covered in all the ways you need.

Having the right level of sole trader insurance in the UK can stop your business from folding if something unexpected happens, so don’t delay, because one of the problems with unexpected problems is that they can suddenly happen at no notice!

#6 – Protect your loved ones

While not exactly a way to save your business money, making sure that you have life insurance, critical illness cover, and self-employed income protection could be very important for you and your family.

Self-employed people have no access to basic support such as statutory sick pay, and your death will wipe your entire income from those you leave behind, potentially putting their home at risk.

So, though it’s an additional expense, make sure you protect your loved ones with life cover. Just don’t try to write it as a business expense, because it’s not, and the implication of doing so could harm your claim when it’s needed.

#7 – Plan as far in advance as you can

Careful planning is one of the ways successful small businesses pay less taxes and improve on money saving across the UK.

Everything is improved with a strong strategy:

  • Understanding how long your clients take to pay invoices and making sure the cash flow is organised around these dates can avoid charges, periods of financial difficulty and frustration.
  • Budgeting for travel well in advance can save on train fares, parking fees and more.
  • Looking to spread the cost of large investments through leasing or asset finance improves budgets and long-term affordability.
  • Scheduling your work so that you deliver on time and aren’t working up against the wall will improve cashflow, impress clients (so that when you go to put up rates, they don’t argue!), and give you a far better quality of life.
  • Analysing the interest rates on credit and putting aside money monthly to pay for tax means you are not giving away money in fees and charges unnecessarily.
  • Planning for growth will let you see where money is best spent and give you direction.

#8 – Read articles on Compare UK Quotes!

If you want to know how to save money in the UK, we at Compare UK Quotes have done all the hard work for you!

Spend a day reading our articles and you’ll come out prepared for anything. Don’t forget to share the ones you like and help other people to take control over their business and personal finances!

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